Slump in tourist arrivals will affect GDP growth - S&P
Published:Friday | September 30, 2011 | 12:00 AM
Rating agency Standard & Poor's says it expects tourist arrivals to slump and consequently drag down Jamaica's economic growth up to 2013.
The statement accompanied an S&P analysis of Ecuador, but underscored fears of a second recession in the developed world.
"We expect that Jamaica's and Grenada's growth will remain slow over the next two years because tourism is expected to lag a relatively slow recovery in both the US (United States) and the UK," stated S&P.
Tourism, Jamaica's second largest earner of foreign exchange, contributes some US$2 billion to the economy annually. Currently, the US and European economies, respectively, account for the largest and third largest group of tourists to the island.
However, these economies are facing the threat of double dip recession and are grappling with high debt and fiscal deficits.
Stopover arrivals for the January to May period increased by 3.9 per cent to some 879,300 compared with year earlier levels.
The rise, however, halted in May as arrivals for that month dipped 2.1 per cent to 146,600 due to fewer European, US and Canadian visitors than a year earlier, according to Jamaica Tourist Board (JTB) data.
Evelyn Smith, president of the Jamaica Hotel and Tourism Association, had previously said that she expected the decline based on correspondence with members. Stopover arrivals from the US dropped 1.6 per cent to total some 102,420, Europeans arrivals fell 12.6 per cent to 19,120 and Canadian visitors dropped 0.6 per cent to 17,730, according to the JTB.
S&P predicts growth for Jamaica of less than two per cent over the next two years, according to an S&P report published in June entitled, Focus On Latin America: A Round-Up of the Region's Latest Sovereign Developments.
"Jamaica's GDP contracted in 2010 by about 1.2 per cent, worse than our expected 1.0 per cent contraction. This performance highlights the structural deficiencies in Jamaica. We do not expect trend growth to be above 2.0 per cent over the next three years," S&P said of the country, which has a rating of B-/Stable/C.
Last week, the International Monetary Fund maintained its growth projections for Jamaica at 1.5 per cent this year, while estimating GDP expansion of 1.7 per cent in 2012, and 3.0 per cent by 2016.